Resort real estate recovery "off track"

Illiquid resort real estate

A recent real estate market report by the Vietnam Association of Realtors (VARS) shows that in the third quarter, the country had about 16 tourism and resort real estate projects for sale, providing about 970 products to the market, double the previous quarter, but only 20% compared to the same period last year. The supply is mainly concentrated in the Central and Southern regions.

In addition to the slow improvement in supply, market demand for this segment is also low, leading to an absorption rate of only 1/10 of the same period in 2022 when it reached 23%, equivalent to 225 transactions.

With the inventory, mainly resort villas with high prices, it is difficult to liquidate. Most of the resort real estate inventory has remained "inactive" throughout the past time.

In the third quarter of this year, the selling price of this segment continued to trend sideways, without much fluctuation. Investors continued to apply incentive programs, discounts, and interest rate support to stimulate demand.

The reporting unit forecasts that in the coming time, transactions will improve but the quantity will not be much and there will be differentiation between product lines. Condotel transactions are expected to have the highest increase because the primary supply of this segment has returned after a long absence from the market.

The resort real estate market continues to be gloomy (Illustration photo: Ha Phong).

According to DKRA, in the third quarter, the country had 3 resort villa projects opening for sale in the next phase, with a consumption rate of 10%. A total of 81 units were added to the new supply, although slightly increased compared to the second quarter, but still at a low level, down 93% compared to the same period in 2022.

DKRA commented that investors are still quite cautious in bringing products to the market, thereby causing supply to continue to maintain a downward trend from the end of the second quarter of 2022 until now.

Continuing the gloomy trend, demand in the third quarter also remained low when the new consumption recorded 8 units, equivalent to 2% compared to the same period last year. In general, the sales speed in new projects was quite slow, most transactions were concentrated in products priced under 10 billion VND/unit.

Regarding the market in the third quarter of this year, the Ministry of Construction also said that resort real estate is a segment with great expectations but also great disappointments. In July and August this year, the number of newly opened resort real estate transactions was very limited.

"When demand for purchases and deposits are low, many investors are more cautious in bringing products to the market. This has caused the new supply of the segment to continuously decrease this year," the report of the Ministry of Construction stated.

Cut loss but price is still high

Sharing about the current situation of the resort real estate market, according to Mr. Nguyen Vu Cao - General Director of Van Khang Phat Investment Joint Stock Company - the general investment power in the market is weak, with few transactions. This segment is no longer attractive to investors. Future investment flows may change because investors have not seen the effectiveness of this type of product.

Regarding the current situation of resort real estate being sold at a loss, he acknowledged that although it is being sold at a loss, the product has not yet reached its true price. "Losses compared to when prices were at their "peak". Real estate prices are decreasing but compared to the 2019-2020 period, they are still high," Mr. Cao shared.

He predicts that the resort real estate segment will recover by 2026 at the earliest, if not longer.

Experts predict that the resort real estate market will not recover in the next 1-2 years (Illustration: Ha Phong).

According to Mr. Nguyen Van Dinh - Chairman of the Vietnam Association of Realtors (VARS), in the short term, it is necessary to speed up and shorten the delay of regulations on ensuring the rights and interests of secondary investors when participating in resort real estate investment projects to create peace of mind for investors. In the long term, the legal issues of resort real estate stipulated in the laws need to be unified and issued soon.

"The market will only be open when the law is clear, consistent, and clear, ensuring the rights and legitimate interests of all participants. Especially for resort real estate, the amount of capital that developers and investors spend when participating in this market is often larger than other markets," said Mr. Dinh.

Mr. Mauro Gasparotti - Director of Savills Hotels - said that although Vietnam's resort industry is considered to have great potential, not all models can operate effectively.

Resort real estate needs a long-term strategy (Illustration: Ha Phong).

In recent times, some investors have rushed into the market without a thorough assessment of local market conditions, even assuming that all hotel business models are the same. This has led to poor project planning and implementation, limiting the project’s ability to operate after completion.

Source: https://dantri.com.vn/bat-dong-san/bat-dong-san-nghi-duong-lech-ray-phuc-hoi-20231104230011207.htm